Export cost cuts might means big port change

Press, 7 November 1984, Page 1

Export cost cuts might means big port change

By

MICHAEL HANNAH

in Wellington

Extensive private ownership of port facilities is canvassed as a way of reducing onshore .costs to exporters, in a Government report released yesterday.

Strong arguments are put against monopoly practices by harbour boards and maritime trade unions, and the report favours increased competition on the waterside and a more flexible system for setting manning levels.

The report is a discussion document, prepared by the Ministry of Transport, on onshore costs, and includes no policy decisions. Public submissions on the document have been invited up to January 31, 1985, and a public seminar will be held on December 4 this year to discuss the report. The possibility of private ownership or provision of ports, specialised terminals, tug services, cargo-handling gear, and waterside labour are canvassed.

It also suggests that harbour board finance should no longer qualify as local

body stock for investors, while loan money for certain projects could be sought on the open market.

The present manning levels are criticised as too high, in spite of a 31 per cent reduction between 1972 and 1983, and favours the creation of a single trade union and a single employers’ body to reach a more flexible manning system.

Competition between ports is “neither extensive nor open,” the report says. It faults particularly the cross-subsidising of labour costs practised by the Waterfront Industry Commission; the use of averaged port service charges, which it says disguises the true costs at distant or inefficient ports; and cargo aggregation and/or centralisation used by some big shippers and ship owners. Three main policies are offered to improve port costs and efficiency. These range in the report from: © Private ownership of ports or port assets, or a change in policy governing the commercial activities of harbour boards; and © Public ownership as at present, but allowing for variation and improvement; to

© Centralised control of all ports, removing price and service competition so as to increase efficiency through improved control and co-ordination of port operations and development.

The report identifies private stevedoring companies as the only significant element of commercial competition within ports. The provision of waterside labour, wharves, onwharf storage, marine services and, in many cases, cargo-handling mobile plant and cranes were all public sector monopolies or near monopolies.

“It was frequently suggested to us that a stronger element of competition should be introduced into waterside labour, tug services, and the provision of cargo-handling equipment in the interests of economy and efficiency,” the report says.

Large shippers, such as forestry companies, had also been keen to develop private self-contained terminals in harbours for maximum cost control.

The report questioned whether harbour boards were best placed to take decisions on the extent of private involvement in port functions, because of their own significant financial involvements, and it suggested the Ports Authority could be an impartial arbiter in this area.

However, the report also questioned whether harbour boards should continue to define their own financial objectives, or whether greater guidance should be provided.

It noted a conflict between the traditional approach of harbour boards to provide regional services and a more recent approach to attain commercial goals, which had been generally encouraged by the Government.

A comprehensive revision of the . Harbours Act, 1950, appeared an appropriate place to give effect to any necessary changes, the report said. Turning to manning levels, the report said that the efficiency of many functions on the waterfront was hindered by “the successful efforts of the waterfront unions to retain manning levels and labour-intensive practices that exceed reasonable requirements.” For the most part, such practices occurred with the explicit or implicit approval of employers, it said. Present methods of reducing manpower levels in a fair and equitable way may not have kept pace with the level of change required, the report said.

“It will therefore be

necessary to ensure that the' mechanism for fixing watersider numbers at the ports is supported by a workable system for compensating those who may be no longer required, so that the appropriate workforce levels may be more swiftly achieved,” it says. It went on to say that flexible approaches used by some provincial ports could improve the labour efficiency at the larger ports. The creation of a single waterfront employees’ union and standardisation of watersider terms and conditions throughout New Zealand appeared desirable. A single employer’s negotiating body was also more likely to achieve agreed terms and conditions in the national interest, particularly if membership of the group was mandatory and its decisions binding on all members, the report said.

It criticised the incentive contract scheme for watersiders as an “outdated means of supplementing watersiders’ remuneration,” and recommended a re-

vision, though it acknowledged that watersiders’ incomes were significantly boosted by the scheme, recommended care be taken to retain fair wage levels in any new proposal.

The report raised the possibility of greater consideration being given to the availability of workers at adjacent ports in setting manpower levels, and the greater use of inter-port transfers. On harbour charges, the report recommended a review of the practice of aggregating costs in freight rates, arguing that it benefited meat works and wool facilities particularly, which were a greater than average distance from port facilities. More transparency was also suggested in all transport links, so that owners of cargo or shippers could work out the actual costs of each link. A mechanism allowing for swifter price changes in harbour charges was also favoured in the report.